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Reading 7: The marketing mix - place (distribution channels), Prohibits…
Reading 7: The marketing mix - place (distribution channels)
1 Distribution channels
'Value delivery network'
Functions of channel members ((Kotler and Armstrong (2016, pp. 378-9))
Information
Promotion
Contact
Matching
Negotiating
Financing
Risk taking
Traditional distribution channels and a vertical marketing system (VMS)
Traditional distribution
Manufacturing
Wholesaler
Retailer
Consumer
Vertical marketing system (VMS)
Manufacturing
Wholesaler
Retailer
Consumer
Leading channel member
Subordinate channel members
This concept would only be possible under the following circumstances/organisations
Corporate VMS common examples
Apple
Microsoft
Xbox
Windows 10
Google
YouTube
Netflix
Sky Q
Spotify
Contractual VMS common examples
McDonalds
Subway
Burger King
Costa Coffee
Pret A Manger
Starbucks
Nando's
Fast food outlets
KFC (Kentucky Fried Chicken
BMW
Volkswagen
Peugeot
Car dealerships
Ford
Mercure
Hotels
Premiere Inn
Holiday Inn
Best Western
Domino's Pizza
Administered VMS
Collaborative distribution
backhaul
Co-loading
Continuous move routing
Physical internet
Choosing the right distribution channel
Influences for distribution objectives and choices
The level of service they wish to provide
The size of the company
The type of product
Exclusive distribution
Through one or only an exclusive outlets
Intensive distribution -
Widespread
Convenient locations
Selective distribution -
Fewer, selected outlets
Competitors
Environmental factors
STEEPLE
Exclusive dealing
Manufacturers requires its distributors to sell only its product(s) and precludes its distributors from selling competitors' products.
Sales territory restrictions
Purpose
Tying agreements
Purpose
Manufacturers ties a distributor to taking more or all of its products.
Omni-channel world
1/7 problems in embedded in the marketing mix
Multiple distribution channels
In store
Online
Prohibits from selling manufacturers products overseas.
All of these arrangements can restrict competition, restrain trade and create monopolies as they each one raises potential legal issues